The word ‘competency’ has its roots in a Latin word ‘competentia’ that implies “having the right to speak” or “being authorised to judge”. Thus, they are abilities, traits, skills or knowledge that are considered favourable for good job performance. The concept of Competency management in HRM in not new and traces its history to 1970s.
Competency Management focuses on integration of human resource planning in an organisation with its strategic vision by qualitative and quantitative analysis of competencies of current manpower of the organisation and its comparison with the level of competencies required to meet the goals and mission of the organisation. After this analysis, targeted and efficient HR policies and strategies are devised to bridge gaps.
Today, competency management is being used in every facet of human resource management. It is utilised in recruitment and selection, succession planning, compensation and benefits, training and career development as well. The approach undertaken is to identify an appropriate competency model, which is a framework that lists down the required competencies for being effective in the assigned job. Here, the competencies are categorised into two- soft competency that relates to communication and interpersonal skills like leadership and hard competency, which relates to technical qualifications needed for the job, like financial analysis and operational analysis. Many ‘core’ competencies are first identified, which is then followed by choosing additional competencies for each sub-group.
Competency Management is being increasingly used in organisations as it targets enhancing the potential of the organisation’s workforce which will ultimately aid in the organisation reaping more revenues and having an edge over other competing firms. It encompasses competency profiling, competency based job descriptions, competency based selection, and competency based training. For example, an organisation that designs its training program directed towards achieving set objectives and ‘performing’, rather than focusing on ‘knowing’ is using competency based training.